IRS Scraps Rule to Collect Donors’ Personal Data

A day before the comment period closed, 215 nonprofit organizations in a joint letter[2] called on the IRS to withdraw the proposed regulation.

“We have serious concerns that the proposed voluntary reporting regime is inappropriate because it would expose the public to increased risk from identity theft, impose significant costs and burdens on nonprofit organizations, and create public confusion and disincentives for donors to support the work of nonprofits,” the letter states.

Noting that the IRS warns people not to give out their Social Security numbers unless it’s absolutely necessary, the letter states that a charitable organization never should ask for Social Security numbers and, if one does, it should be considered a sign of a scam or fraud and reported to law-enforcement officials.

“This conflicting message from the IRS is certain to confuse the public and result in fraud,” the letter states.

At the National Council of Nonprofits, President and CEO Tim Delaney said in a statement on Jan. 7 that the Treasury Department and the IRS should work with the nonprofit community in developing “sound solutions before they issue proposals that will harm the public.”

“If Treasury and the IRS had listened first instead of proposed first, they could have learned immediately how harmful their proposed rules were and avoided confusing the public,” Delaney stated. “Even though it was withdrawn, this rulemaking wrongfully suggested that giving out Social Security numbers may be appropriate in some circumstances, thus opening the public up to scam artists who could hurt individuals through identity theft and sully the good name of charitable nonprofits.”

The agencies also could have avoided problems they’ve created for themselves, which include pending legislation to limit their power, he said.